Introduction to Financial Ratios
Return on Owner's Equity
(Income/Sales) * (Sales/Assets) * (Assets/Owner's Equity)
Dividend Payout
Dividends/Net Income
Inventory Period in Days
365/Inventory turnover
Day's Receivables
Accounts Receivable/Average Days Sales
Debt to Equity Ratio
total liabilities/owner's equity
Return on Assets (ROA)
Income/Assets
After tax interest expense
Interest expense × (1 - tax rate)
Net Profit
Net Income/Net Sales
Return on Equity (ROE)
Net Income/Stockholders Equity
Average Day's Sales
Net Sales/365
Working Capital Turnover
Net Sales/Average Current Assets - Average Current Liabilities
Asset Turnover
Net Sales/Total Assets
Return on Invested Capital (ROIC)
Net income/total liabilities and stockholders' Equity - Current liabilities
Times Interest Earned
Pretax operating Income + Interest Expense/Interest
Debt Ratio
Total Debt/Total Assets
Inventory Turnover
cost of goods sold/average inventory
Current Ratio
current assets/current liabilities
Dividend yield
dividends per share/market price per share
Price to Earnings Ratio (PE)
market price per share/earnings per share
Earnings Per Share (EPS)
net income - preferred stock dividends / Number of shares common stock and Equivalents
Acid Test Ratio
quick assets/current liabilities